Report: Chrysler expected to file for Chapter 11 bankruptcy

by Sundeep Kothari

Atlanta, Georgia Debt Help Attorney

Report: Chrysler expected to file for Chapter 11 protection

From the article:

Auto industry, will file for bankruptcy today after last-minute negotiations between the government and the automaker’s creditors broke down last night, an Obama administration official said.

U.S. officials had offered Chrysler’s secured lenders $2.25 billion in cash if they would agree to writedown the $6.9 in secured debt that the company owed. But a small group of hedge funds refused the 11th-hour deal, forcing an imminent bankruptcy.

An administration official this morning expressed disappointment, saying the holdouts had failed to “do the right thing,” but that “their failure to act in either their own economic interest or the national interest does not diminish the accomplishments made by Chrysler, Fiat and its stakeholders, nor will it impede the new opportunity Chrysler now has to restructure and emerge stronger going forward.”

President Obama is scheduled to address the issue at noon today at the White House.

As talks broke down late last night, it became near certainty that the Obama administration would send Chrysler into bankruptcy under a plan that would replace chief executive Robert L. Nardelli and pump billions of dollars more into the effort, all in hopes that the company could emerge from court proceedings as a re-energized competitor in the global economy.

When Lehman Brothers was allowed to go into bankruptcy, the stock market soon-after went into free fall, and the economy hasn’t recovered since.

Will the same thing happen now? Or will the economy stay about where it is?

No one really knows. This is kind of a test against the idea that some companies are simply too big to fail.

Lots of jobs are going to be lost through this bankruptcy, not simply at Chrysler but for dealers, suppliers, and more.

And no one is certain that Chrysler can emerge from a Chapter 11 bankruptcy, rather than end up getting liquidated, the way Circuit City went into bankruptcy thinking it could emerge but eventually shutting down completely.

Treasury announces new plan to help homeowners with second mortgages

by Sundeep Kothari

Atlanta, Georgia Bankruptcy Lawyer

Treasury announces help with second mortgages

From the article:

The Obama administration sought to expand its $50 billion plan to reduce home foreclosures, announcing a new program on Tuesday to help troubled homeowners modify second mortgages or piggyback loans.

Under the new plan, the Treasury Department will offer cash incentives and subsidies to lenders who agree to substantially reduce the monthly payments on second mortgages or forgive those loans entirely.

The goal of the plan is to plug a hole in the administration’s original program, which offered subsidies to lenders who agreed to modify the primary or first mortgages of homeowners who had fallen delinquent or were in danger of doing so.

But millions of homebuyers took out second mortgages to buy houses with little or no down payment or to finance home improvements and other purchases. Those second-lien mortgages have to be renegotiated separately, a step that often complicates efforts to modify the primary loans.

Analysts predict that at least 4 million homeowners will face foreclosure proceedings this year, up from about 2.2 million in 2008. Administration officials said about half of those people had second mortgages.

Parent company of Perimeter, North Point, Cumberland, Southlake Malls files for bankruptcy

by Sundeep Kothari

Atlanta Georgia Bankruptcy Lawyer

Parent company of Perimeter Mall files for bankruptcy

General Growth Properties, parent company of Atlanta malls Perimeter Mall, North Point Mall, Cumberland Mall and Southlake Mall, filed for bankruptcy protection in New York. The company was unable to get debt holders to agree to different terms.

No change is expected for customers and visitors to the various malls.

Equitable Building to be auctioned on May 5th

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

Equitable Building to be auctioned on May 5th

Equitable Building, the 33 story building located in downtown Atlanta, will be auctioned on May 5th. The building currently has only about 50% of its space leased.

Report: GM preparing to file for bankruptcy by June 1st

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

GM preparing to file for bankruptcy by June 1, 2009

The New York Times is reporting that GM may file for bankruptcy by June 1, 2009. This would be a pre-packaged bankruptcy, meaning that creditors would agree to terms prior to filing. The aim of this bankruptcy would be to divide GM into two parts, a “good” part and a “bad” part. The good part would emerge quickly out of bankruptcy, while the bad part would stay in bankruptcy for a longer period of time. Bondholders are expected to object to any bankruptcy filing.

Eason maintains control of Creative Loafing

by Sundeep Kothari

Kothari Law Firm

Eason maintains control of Creative Loafing

The judge in Creative Loafing’s Chapter 11 Bankruptcy case decided that Ben Eason, current CEO of Creative Loafing, would maintain control of the company, but noted that the proposed Chapter 11 plan would be difficult to confirm.

Bankruptcy Judge to determine who controls Creative Loafing

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

BK Judge to determine who controls Creative Loafing

The bankruptcy judge in the Chapter 11 case filed by Creative Loafing will determine who controls the popular Atlanta alternative publication, Creative Loafing, as well as its sister publications in other cities.

Ben Eason, whose families started the business, claims that he should retain control. Atalaya Capital Management, which lent Creative Loafing $31 million and is still owed that money, claims that it should be in control.

Creative Loafing has publications in six cities.

Fay Gold shuts down Atlanta’s 2nd largest art gallery

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

Fay Gold shuts down her famed art gallery

From the article:

Fay Gold, a legend in the city’s art community, is closing her gallery because the economy has grown about as dark as one of Francisco de Goya’s paintings.

Gold, whose gallery was established in 1980 and who has represented famous American artists including Jean-Michel Basquiat, said her sales volume dropped too low to meet her operating costs.

Overhead at Atlanta’s second-largest art gallery was at least $40,000 a month. Sales, which once averaged at least $2.5 million a year, have dropped to $700,000.

Gold began seeing trouble ahead as early as last year. She took steps to cut costs, including letting people go and eliminating the gallery’s catalog, which had been a part of her business for years.

But, the cutbacks weren’t enough.

“My bookkeeper finally sat me down and said, ‘You’re just getting into a black hole with this — you’re bleeding money,’ ” Gold said. “ ‘You’re going to have to close.’ ”

The revelation is not only a blow to Atlanta’s art scene, in which Gold is a luminary. It also suggested many smaller Atlanta art galleries may be facing similar financial problems in an economy that has put he clamps on consumer confidence and discretionary spending.

Atlanta Shakespeare Co. faces severe credit crisis

by Sundeep Kothari

Atlanta, Georgia Bankruptcy Attorney

Shakespeare Tavern faces severe revenue shortage

Atlanta Shakespeare Co. sent out an e-mail recently saying revenues were down $213,000 and that they needed $10,000 immediately. Although the company brought in $1 million in revenue last year, revenue was dropping in the latter part of the year.

Why the housing mess is such a mess

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

Why is the housing mess such a mess?

1. There are a glut of unsold houses and condos due to overbuilding. Banks kept building and building and building and they didn’t really consider whether people would buy these houses or not. They simply assumed that there would always be sufficient numbers of buyers.

2. In addition, there are currently people that own houses that they simply can’t afford. It would be better for them to leave their houses and move into apartments. But if they do that, then those houses go onto the market and add to problem #1.

3. Many people are afraid of buying homes because of deflating home equity – i.e. today the home is worth 200,000, but then in one year it could be worth 180,000. This is a gigantic disincentive for people to people to want to invest in homes in the short term.

4. Bad word of mouth on home buying – when people lose their home, they tell their family and friends what a horrible nightmare it was. This bad word of mouth scares some people not to buy a home.

5. Job losses and wage cuts – people who are renting and who could qualify are terrified of losing their jobs or having their wages cut and being stuck in a mortgage that they might not be able to afford in the future.

6. Bad word of mouth on selling a home – many people who are trying to sell their home complain to their family and friends about how hard it is to find a buyer. This scares qualified, potential new home buyers from purchasing new homes.

7. Banks afraid of deflating home values – similar to buyers being afraid of deflating home equity, banks have the same fear – i.e. today the house is worth $150,000, but in three years that house could be worth $75,000. Banks have the fear that they will give out loans, and their loan will be worth less than the collateral on the note. Meaning they have created more “toxic assets” or “bad paper”.

8. Sellers competing with foreclosures – i.e. a new house in a subdivision is worth 250,000. A foreclosed house in that subdivision that is only one year old can be purchased for 175,000. This is a significant price difference and why new buyers are strongly considering foreclosed properties over new homes. The seller of the new house can’t compete with that price, unless the seller of the new house is willing to take a massive loss.

New Means Test Information Goes Into Effect on March 15th

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

New information for means test

The USDOJ has released new information regarding the means test for Chapter 7 and Chapter 13 bankruptcy filings. This new information goes into effect for cases filed on March 15, 2009.

For Georgia, the income test for automatic presumption of eligibility (income only test – other tests still apply) to file for Chapter 7 bankruptcy is:

One person household: $40,760
Two person household: $54,054
Three person household: $61,959
Four person household: $71,554

For households with additional members, the USDOJ instructs filers to add $6,900 for each individual in excess of 4.

In some situations, even if filers have income above these amounts, they might still be eligible for Chapter 7 bankruptcy filing, depending upon their expenses.

Robert DeNiro Looks To Obtain Father’s Paintings From Art Gallery in Chapter 11 Bankruptcy

by Sundeep Kothari

Atlanta Georgia Bankruptcy Lawyer

DeNiro seeks father’s paintings from art gallery

Robert DeNiro has asked the bankruptcy court that is handling the Chapter 11 filing of Salander-O’Reilly Galleries LLC to turn over paintings by his father to him.

In bankruptcy, once a case is filed an automatic stay goes into effect, meaning that creditors are prohibited from collecting on debts. The property that was in the possession of the debtor becomes part of the bankruptcy estate and can only be released through court order or via voluntary surrender by the debtor with notification to the trustee (who then must give no objection).

Six Flags, facing severe debt, considers bankruptcy

by Sundeep Kothari

Atlanta Georgia Bankruptcy Lawyer

Six Flags considers filing for bankruptcy

Six Flags is considering an August 2009 bankruptcy filing if it cannot reach deals with its lenders to re-structure outstanding debt.

From the article:

A spokeswoman for the company, Sandra Daniels, said yesterday that a bankruptcy filing would not disrupt park operations. “Whatever the end result is of our discussions . . . Six Flags is open for business,” she said.

Six Flags’ warning that it might turn to bankruptcy court came after its announcement that last year it lost $113 million, compared with $253 million in 2007, as attendance at its parks nudged up despite the economy. Its loss for the fourth quarter, however, widened to $201 million from $127 million in the fourth quarter of 2007.

Bankruptcy Judge orders Michael Vick to appear in person at confirmation hearing

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

Judge orders Vick to appear in person

From the article:

Fallen NFL star Michael Vick must appear at a bankruptcy hearing next month but should pay his own way from the Kansas prison where he is serving time for his role in a dogfighting conspiracy, a judge ruled Wednesday.

At an hourlong hearing, U.S. Bankruptcy Judge Frank J. Santoro rejected the government’s suggestions that he either postpone Vick’s April 2 bankruptcy confirmation hearing or allow the suspended player to testify by video hookup from the federal penitentiary at Leavenworth, Kan.

“I’m not going to be put in a position of determining credibility or demeanor over a television,” said Santoro, who has insisted since Vick filed for bankruptcy in July that he would have to testify in person.

The U.S. attorney’s office in Alexandria, Va., objected to a proposed court order compelling federal marshals to pick up the former Atlanta Falcons quarterback and taking him to Virginia. They cited the logistical burdens, security risks and costs of the temporary transfer.

Santoro said the government provided no evidence to back up the inconvenience and security concerns. However, he agreed with the government’s claim that the taxpayers should not have to foot the bill.

The government provided no estimate of how much the trip would cost. One of Vick’s criminal attorneys, Lawrence Woodward, presented receipts showing it only cost about $3,636 to bring Vick from Leavenworth to Surry County, Va., in November to plead guilty to state dogfighting charges. Vick paid for that trip.

Vick’s Chapter 11 bankruptcy plan is based largely on his intention to resume his NFL career. Vick was suspended indefinitely after his 2007 indictment, and league commissioner Roger Goodell has said he will review Vick’s status after he is released.

The Falcons still hold the contract rights to Vick but have said they will try to trade him. Vick’s bankruptcy plan would allow him to keep the first $750,000 of his annual pay. After that, a percentage would go to his creditors based on a sliding scale.

Michael Vick’s home fails to sell at foreclosure auction

by Sundeep Kothari

Atlanta Georgia Bankruptcy Attorney

Former Falcon Vick’s home fails to sell at foreclosure auction

Michael Vick’s home fails to sell at a foreclosure auction. The 20,000 square foot home was listed at a minimum bid of $3.2 million, but no bidder showed up. The home is located at the Sugarloaf Country Club, and is being sold to raise money in Vick’s Chapter 11 bankruptcy case, as well as pay off the mortgage company holding the note on the home.